The time is right for digitalisation to change the shipping industry

[ARTICLE EXCERPT]

There is a time and place for everything, and while digitalisation is nothing new to the shipping sector, Containerchain chief strategy and corporate development officer Chris Collins believes the time is ripe for the shipping industry to fully embrace digitalisation.

“The take-up has been slow and there have been periods of peaks and troughs... but what we have got now, like what we had never had before, is the internet running at an interconnected level in society globally; that is why digitalisation take-up and influence can be much greater than before.

“Timing is everything, and it feels like the timing is right now for this industry... what we are seeing now is the ‘soft’ infrastructure of the internet reaching a level of interconnectivity and technological advancement to be able to really effect change.”
Another factor leading to the renewed interest in digitalisation, according to Mr Collins, is due to the prolonged global industry downturn over the past five to eight years, which has drastically hit the bottom lines of all shipping companies.
This has forced them to take a step back to look at inefficiencies that have plagued shipping for years but were not properly addressed, for various legacy reasons. These include matters such as port congestion, as well as the inability to communicate in real time with customers like container trucking companies.

However, Mr Collins warns that all this must be tied to a re-engineering of business processes to more effectively apply information technology to deliver significant value and lower costs to the shipping industry.
In his view, there has been a reluctance to enact change in shipping as the processes required are quite substantial.
Few people seem to understand that for digitalisation to be effective in shipping, the business processes must be examined thoroughly to identify bottlenecks such as those mentioned above and to use digitalisation as a tool to improve the bottom line, though it should not be seen as a magic bullet to solve all the industry's woes overnight, he adds.

Mr Collins says although there was no doubt that the demise of South Korea’s Hanjin Shipping was more a result of the global financial crisis starting in 2008 and the industry depression that had persisted ever since, perhaps if the company had adopted business processes that had been re-engineered through digitalisation earlier, it might have been able to better weather the tough times.

Sharing is caring (about the industry)
In order for digitalisation to work, aside from business process re-engineering, there has to be increased sharing of information, says Mr Collins. “If the industry does not want to share, then digitalisation will not optimise to the full potential.”

People tend to be more concerned about the fact that the information is proprietary and therefore they are not going to share it, as they are unsure for what purpose that information will be used. Mr Collins feels shipping firms need to take a step back to assess what kind of information they are being asked to share and how sensitive it is. Information should be shared among all segments of a supply chain, be it a cargo importer or exporter, to enable the system to work more efficiently, he says.

“We have a strong belief that if the industry adopts digitalisation correctly, it will also understand the need to collaborate and share that information so the technology tool... can deliver value for everyone. If information cannot be shared the right way, then we do not think digitalisation will succeed as it should."

Mr Collins highlights the tie-ups between Chinese online e-commerce portal Alibaba and Maersk, CMA CGM, as well as Evergreen Marine as a game-changer in terms of the impact of digitalisation on the shipping industry.
He notes that Maersk particularly has been at the vanguard of technological change with its collaboration with IBM to develop blockchain technology. And he feels the industry would benefit if some form of blockchain technology were to eventually be shared and adopted across the sectors worldwide.
“Blockchain’s biggest benefit for the industry – everyone talks about visibility – is the reduction of transactional-based paper... putting that into an electronic form that is carried within the internet,” he says.
“There may also be some longer-term benefits such as e-payment functionality, which would be very welcome from our perspective.”

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